[Federal Register Volume 74, Number 245 (Wednesday, December 23, 2009)]
[Notices]
[Pages 68291-68294]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30429]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29094; File No. 812-13678]


Cash Account Trust, et al.; Notice of Application

December 16, 2009.

AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements.

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Summary of Application:  Applicants request an order that would permit 
them to enter into and materially amend subadvisory agreements without 
shareholder approval and would grant relief from certain disclosure 
requirements.

Applicants:  Cash Account Trust, Cash Management Portfolio, Cash 
Reserve

[[Page 68292]]

Fund, Inc., DWS Advisor Funds, DWS Balanced Fund, DWS Blue Chip Fund, 
DWS Communications Fund, Inc., DWS Equity Trust, DWS Equity 500 Index 
Portfolio, DWS Global/International Fund, Inc., DWS High Income Series, 
DWS Income Trust, DWS Institutional Funds, DWS International Fund, 
Inc., DWS Investment Trust, DWS Investments VIT Funds, DWS Money Funds, 
DWS Money Market Trust, DWS Municipal Trust, DWS Mutual Funds, Inc., 
DWS Portfolio Trust, DWS Securities Trust, DWS State Tax-Free Income 
Series, DWS State Tax Free Trust, DWS Strategic Government Securities 
Fund, DWS Strategic Income Fund, DWS Target Date Series, DWS Target 
Fund, DWS Tax Free Trust, DWS Technology Fund, DWS Value Equity Trust, 
DWS Value Series, Inc., DWS Variable Series I, DWS Variable Series II, 
Investors Cash Trust, Tax-Exempt California Money Market Fund (each a 
``DWS Investment Company'' and collectively, the ``DWS Investment 
Companies''), and Deutsche Investment Management Americas Inc. 
(``Advisor'' and collectively, ``Applicants'').

Filing Dates:  The application was filed on July 30, 2009, and amended 
on December 10, 2009 and December 16, 2009.

Hearing or Notification of Hearing:  An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on January 11, 2010 and should be accompanied by proof of service 
on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090. Applicants, One Beacon Street, 
14th Floor, Boston, Massachusetts 02108.

FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Attorney, 
at (202) 551-6990, or Jennifer L. Sawin, Branch Chief, at (202) 551-
6821 (Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. Each DWS Investment Company is organized as a Massachusetts 
business trust, a New York trust, or a Maryland corporation and is 
registered with the Commission as an open-end management investment 
company under the Act. Each DWS Investment Company may offer one or 
more series of shares (each a ``Series'' and collectively, ``Series'') 
\1\ with its own distinct investment objectives, policies and 
restrictions. The Advisor, a Delaware corporation, is an investment 
adviser registered under the Investment Advisers Act of 1940, as 
amended (``Advisers Act''). The Advisor is an indirect, wholly owned 
subsidiary of Deutsche Bank AG (``Deutsche Bank''). Deutsche Bank is a 
major global financial institution that is engaged in a wide range of 
financial services, including investment management, mutual funds, 
retail, private and commercial banking, investment banking and 
insurance. The Advisor serves as investment adviser to each Series 
pursuant to an investment advisory agreement with the applicable DWS 
Investment Company (each, an ``Investment Management Agreement''). Each 
Investment Management Agreement was initially approved by the board of 
directors of the applicable DWS Investment Company (each, a ``Board''), 
including a majority of those directors who are not ``interested 
persons'' of the Series or the Advisor as defined in section 2(a)(19) 
of the Act (``Independent Board Members'') and by the shareholders of 
relevant Series in the manner required by sections 15(a) and 15(c) of 
the Act and rule 18f-2 thereunder.\2\
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    \1\ The term ``Series'' also includes the DWS Investment 
Companies listed above that do not offer multiple series.
    \2\ Applicants also request relief with respect to existing and 
future Series and any other existing or future registered open-end 
management investment company or series thereof that: (i) Is advised 
by the Advisor or any person controlling, controlled by, or under 
common control with the Advisor or its successors; (ii) uses the 
multi-manager structure described in this application; and (iii) 
complies with the terms and conditions of this application (together 
with any Series that currently uses Sub-Advisors, each a 
``Subadvised Series'' and collectively, the ``Subadvised Series''). 
All registered open-end investment companies that currently intend 
to rely on the requested order are named as Applicants. For purposes 
of the requested order, ``successor'' is limited to an entity or 
entities that result from a reorganization into another jurisdiction 
or a change in the type of business organization. If the name of any 
Subadvised Series contains the name of a Sub-Advisor, the name of 
the Advisor or the name of the entity controlling, controlled by, or 
under common control with the Advisor that serves as the primary 
adviser to the Subadvised Series, or a trademark or trade name that 
is owned by them, will precede the name of the Sub-Advisor.
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    2. Under the terms of each Investment Management Agreement, the 
Advisor, subject to the oversight of the relevant Board, provides 
continuous investment management of the assets of each Series. The 
Advisor periodically reviews each Series' investment policies and 
strategies and based on the need of a particular Series may recommend 
changes to the investment policies and strategies of the Series for 
consideration by its Board. For its services to each Series, the 
Advisor receives an investment management fee from that Series as 
specified in the applicable Investment Management Agreement based on 
either the average net assets of that Series or that Series' investment 
performance over a particular period compared to a benchmark. The terms 
of each Investment Management Agreement permit the Advisor, subject to 
the approval of the relevant Board, including a majority of the 
Independent Board Members, and the shareholders of the applicable 
Series (if required by applicable law), to delegate portfolio 
management responsibilities of all or a portion of the assets of the 
Series to one or more subadvisers (``Sub-Advisors''). The Advisor has 
entered into sub-advisory agreements (``Sub-Advisory Agreements'') with 
Sub-Advisors to provide investment management services to various 
Series.\3\ The Advisor may also, in the future, enter into Sub-Advisory 
Agreements on behalf of other Series. Each Sub-Advisor is, and any 
future Sub-Advisor will be, an investment adviser as defined in section 
2(a)(20) of the Act as well as registered with the Commission as an 
``investment adviser'' under the Advisers Act. The Advisor evaluates, 
allocates assets to and oversees the Sub-Advisors, and makes 
recommendations about their

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hiring, termination and replacement to the relevant Board, at all times 
subject to the authority of the relevant Board. Sub-Advisors 
recommended to a Board are, and the Sub-Advisors identified above were, 
selected and initially approved by that Board, including a majority of 
the Independent Board Members. The specific investment decisions for 
each Subadvised Series will be made by that Sub-Advisor which has 
discretionary authority to invest the assets or a portion of the assets 
of that Subadvised Series. The Advisor will compensate each Sub-Advisor 
out of the fee paid to the Advisor under the relevant Investment 
Management Agreement.
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    \3\ The Advisor has entered into Sub-Advisory Agreements with 
Aberdeen Asset Management Inc., (``AAMI''), Dreman Value Management, 
LLC (``DVM''), Northern Trust Investments, N.A. (``NTI''), and 
Turner Investment Partners, Inc. (``Turner''). The Advisor has also 
entered into Sub-Advisory Agreements with certain affiliated 
subadvisers: Deutsche Asset Management International GmbH 
(``DeAMi''), Deutsche Asset Management (Japan) Limited (``DeAMJ''), 
and RREEF America LLC (``RREEF'') to provide investment management 
services to various Series. The requested relief will not extend to 
DeAMi, DeAMJ or RREEF or any other Affiliated Sub-Adviser, as 
defined below.
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    3. Applicants request an order to permit the Advisor, subject to 
Board approval, to select certain Sub-Advisors to manage all or a 
portion of the assets of a Series pursuant to a Sub-Advisory Agreement 
and materially amend an existing Sub-Advisory Agreement without 
obtaining shareholder approval. The requested relief will not extend to 
any Sub-Advisor who is an affiliated person, as defined in section 
2(a)(3) of the Act, of the Series or of the Advisor, other than by 
reason of serving as a Sub-Advisor to one or more of the Series 
(``Affiliated Sub-Advisor'').
    4. Applicants also request an order exempting the Subadvised Series 
from certain disclosure provisions described below that may require the 
Applicants to disclose fees paid by the Advisor to each Sub-Advisor. 
Applicants seek an order to permit each Subadvised Series to disclose 
(as a dollar amount and a percentage of a Subadvised Series' net 
assets) only: (i) the aggregate fees paid to the Advisor and any 
Affiliated Sub-Advisors, and (ii) the aggregate fees paid to Sub-
Advisors other than Affiliated Sub-Advisors (collectively, the 
``Aggregate Fee Disclosure''). A Subadvised Series that employs an 
Affiliated Sub-Advisor will provide separate disclosure of any fees 
paid to such Affiliated Sub-Advisor.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by a vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. Form N-1A is the registration statement used by open-end 
investment companies. Item 14(a)(3) of Form N-1A requires disclosure of 
the method and amount of the investment adviser's compensation.\4\
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    \4\ Form N-1A was recently amended by the Commission, effective 
March 31, 2009, and Item 14(a)(3) should be read to refer to Item 
19(a)(3) for each Series when that Series begins using the revised 
form.
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    3. Rule 20a-1 under the Act requires proxies solicited with respect 
to an investment company to comply with Schedule 14A under the 
Securities Exchange Act of 1934 (``Exchange Act''). Items 22(c)(1)(ii), 
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, taken together, 
require a proxy statement for a shareholder meeting at which the 
advisory contract will be voted upon to include the ``rate of 
compensation of the investment adviser,'' the ``aggregate amount of the 
investment adviser's fees,'' a description of the ``terms of the 
contract to be acted upon,'' and, if a change in the advisory fee is 
proposed, the existing and proposed fees and the difference between the 
two fees.
    4. Form N-SAR is the semi-annual report filed with the Commission 
by registered investment companies. Item 48 of Form N-SAR requires 
investment companies to disclose the rate schedule for fees paid to 
their investment advisers, including the Sub-Advisors.
    5. Regulation S-X sets forth the requirements for financial 
statements required to be included as part of a registered investment 
company's registration statement and shareholder reports filed with the 
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require 
a registered investment company to include in its financial statement 
information about the investment advisory fees.
    6. Section 6(c) of the Act provides that the Commission by order 
upon application may conditionally or unconditionally exempt any 
person, security, or transaction or any class or classes of persons, 
securities, or transactions from any provisions of the Act, or from any 
rule thereunder, if such exemption is necessary or appropriate in the 
public interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act. 
Applicants state that their requested relief meets this standard for 
the reasons discussed below.
    7. Applicants assert that the shareholders expect the Advisor, 
subject to the review and approval of the relevant Board, to select the 
Sub-Advisors who are best suited to achieve the Subadvised Series' 
investment objective. Applicants assert that, from the perspective of 
the shareholder, the role of the Sub-Advisor is substantially 
equivalent to that of the individual portfolio managers employed by an 
investment adviser to a traditional investment company. Applicants 
state that requiring shareholder approval of each Subadvisory Agreement 
would impose unnecessary delays and expenses on the Subadvised Series, 
and may preclude the Subadvised Series from acting promptly in a manner 
considered advisable by the Advisor and the Board. Applicants note that 
the Investment Management Agreement for each Series and Sub-Advisory 
Agreements with Affiliated Sub-Advisors (if any) will continue to be 
subject to the shareholder approval requirements of section 15(a) of 
the Act and rule 18f-2 under the Act.
    8. Applicants assert that the requested disclosure relief would 
benefit shareholders of the Subadvised Series because it would improve 
the Advisor's ability to negotiate the fees paid to Sub-Advisors. 
Applicants state that the Advisor may be able to negotiate rates that 
are below a Sub-Advisor's ``posted'' amounts if the Advisor is not 
required to disclose the Sub-Advisors' fees to the public. Applicants 
submit that the relief requested to use Aggregate Fee Disclosure will 
encourage Sub-Advisors to negotiate lower subadvisory fees with the 
Advisor if the lower fees are not required to be made public.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Subadvised Series may rely on the order requested 
herein, the operation of the Subadvised Series in the manner described 
in this application will be approved by a majority of the Subadvised 
Series' outstanding voting securities as defined in the Act, or, in the 
case of a Subadvised Series whose public shareholders purchase shares 
on the basis of a prospectus containing the disclosure contemplated by 
condition 2 below, by the initial shareholder before such Subadvised 
Series' shares are offered to the public.
    2. The prospectus for each Subadvised Series will disclose the 
existence, substance, and effect of any order granted pursuant to the 
application. In addition, each Subadvised Series will hold itself out 
to the public as employing the multi-manager structure as described in 
this application. The prospectus will prominently disclose that the 
Advisor has the ultimate responsibility, subject to oversight by the 
Board, to oversee the Sub-Advisors and recommend their hiring, 
termination, and replacement.

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    3. Within 90 days of the hiring of a new Sub-Advisor, shareholders 
of the relevant Subadvised Series will be furnished all information 
about the new Sub-Advisor that would be included in a proxy statement, 
except as modified to permit Aggregate Fee Disclosure. This information 
will include Aggregate Fee Disclosure and any change in disclosure 
caused by the addition of a new Sub-Advisor. To meet this obligation, 
the Advisor will provide shareholders of the applicable Subadvised 
Series within 90 days of the hiring of a new Sub-Advisor with an 
information statement meeting the requirements of Regulation 14C, 
Schedule 14C and Item 22 of Schedule 14A under the Exchange Act, except 
as modified by the order to permit Aggregate Fee Disclosure.
    4. The Advisor will not enter into a Sub-Advisory Agreement with 
any Affiliated Sub-Advisor without that agreement, including the 
compensation paid thereunder, being approved by the shareholders of the 
applicable Subadvised Series.
    5. At all times, at least a majority of the Board will be 
Independent Board Members, and the nomination of new or additional 
Independent Board Members will be placed within the discretion of the 
then-existing Independent Board Members.
    6. Independent Legal Counsel, as defined in rule 0-1(a)(6) under 
the Act, will be engaged to represent the Independent Board Members. 
The selection of such counsel will be within the discretion of the 
then-existing Independent Board Members.
    7. Whenever a Sub-Advisor change is proposed for a Subadvised 
Series with an Affiliated Sub-Advisor, the Board, including a majority 
of the Independent Board Members, will make a separate finding, 
reflected in the Board minutes, that the change is in the best 
interests of the Subadvised Series and its shareholders, and does not 
involve a conflict of interest from which the Advisor or the Affiliated 
Sub-Advisor derives an inappropriate advantage.
    8. Whenever a Sub-Advisor is hired or terminated, the Advisor will 
provide the Board with information showing the expected impact on the 
profitability of the Advisor.
    9. The Advisor will provide general investment management services 
to each Subadvised Series, including overall supervisory responsibility 
for the general management and investment of the Subadvised Series' 
assets, and subject to review and approval of the Board, will: (i) Set 
the Subadvised Series' overall investment strategies; (ii) evaluate, 
select and recommend Sub-Advisors to manage all or a portion of the 
Subadvised Series' assets; (iii) allocate and when appropriate, 
reallocate the Subadvised Series' assets among Sub-Advisors, (iv) 
monitor and evaluate the Sub-Advisors' performance; and (v) implement 
procedures reasonably designed to ensure that the Sub-Advisors comply 
with the Subadvised Series' investment objective, policies and 
restrictions.
    10. The Advisor will provide the Board, no less frequently than 
quarterly, with information about the profitability of the Advisor on a 
per-Subadvised Series basis. The information will reflect the impact on 
profitability of the hiring or termination of any Sub-Advisor during 
the applicable quarter.
    11. No Board Member or officer of a DWS Investment Company or 
director or officer of the Advisor will own directly or indirectly 
(other than through a pooled investment vehicle that is not controlled 
by such person) any interest in a Sub-Advisor, except for (i) ownership 
of interests in the Advisor or any entity that controls, is controlled 
by or is under common control with the Advisor; or (ii) ownership of 
less than 1% of the outstanding securities of any class of equity or 
debt of a publicly traded company that is either a Sub-Advisor or an 
entity that controls, is controlled by, or is under common control with 
a Sub-Advisor.
    12. Each Subadvised Series will disclose in its registration 
statement the Aggregate Fee Disclosure.
    13. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that in the order requested 
in the application, the requested order will expire on the effective 
date of that rule.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30429 Filed 12-22-09; 8:45 am]
BILLING CODE 8011-01-P